UK PP & ISAs

[tbone]

Hi Guys,

I'm looking to setup a UK PP and I'm wondering about the best way to structure it taking into account the advantages of the tax-exempt ISA wrapper given that I have more to invest than will fit in one ISA subscription.

I'm planning on holding:

LTT: TR60.L - exempt from capital gains tax
STT: Treasury Ladder (1-3 years out) - exempt from capital gains tax
STK: HSBC FTSE All Share (OEIC Fund)
Gold: SGLN (iShares Gold ETF) - no income

1.  Given that they all have slightly different tax behaviour, I thought it would make sense to fill the tax-free ISA wrapper in the order of tax exposure.  If I follow this, given how much I need to invest & how much room I have in my ISAs I would end up with all my Long Term Treasuries & Stocks in the ISA, and Gold and Cash outside of it.  But what if stocks have a bad year, but gold goes nuts, I may have to rebalance more into the ISA than I can legally put in in one year.  (I had real problems trying to explain that, hope it makes sense!  )

So is it actually better to effectively have two PPs, one within an ISA wrapper, and one outside?  Then all the rebalancing would occur within the ISA.

2. Given the limits of the govts. guarantee scheme it would be wise to split savings across multiple institutions.  But this creates the same problem, as I imagine it's not so easy to rebalance across ISA providers.  So would it be best to have multiple ISA providers, each with an individual PP structure?

Obviously this makes it more of a pain to manage and the trading charges start to magnify.

Any thoughts guys?

Thanks!

T.

[gizmo_rat]

I wouldn't over think it, the only certainty is that TR60 will spit out interest payments twice a year, so look to ISA up that first.

Trying to rebalance across multiple ISA providers seems like a unnecessary headache. You sell one asset and buy another within the same wrapper unless I'm missing something, over time your asset allocation in any given ISA will drift, but so what ?

If you find yourself needing to buy an asset over and above your ISA limit then just do so in an ordinary trading account with (one of your) your ISA providers, then ask them to bed & isa it in the new tax year.

I suspect you're worrying unnecessarily about rebalancing, rebalance events don't happen that often and when they do, you've plenty of CGT allowance headroom. If you're accumulating you're less even less likely to hit a rebalance event in any case.

Setting up a PP in the UK is straightforward and once its done you can pretty much forget about it, it doesn't require tending.

[tbone]

Gotcha, thanks Gizmo.

[magneto]

Drifting off topic perhaps, am never too clear with the PP whether for a UK investor keeping purely to UK stocks is sensible.  The UK seems something of a backwater and represents about 8% of world stocks as far as I can recall.

Clive or someone may have data on performance comparisons between UK only stocks and world stocks but my gut feeling is that UK only may be too restricive and could well underperform.

If looking for a single fund with world coverage how about IWRD from iShares or the new cheaper Vanguard VWRL.